New York City Hotel Rates May Skyrocket Soon – Tips to Lock in Affordable Accommodations Before It’s Too Late
New York City Hotel Rates May Skyrocket Soon - Tips to Lock in Affordable Accommodations Before It's Too Late - - Demand Outpacing Supply for NYC Hotel Rooms
New York City has long been one of the world's most popular tourist destinations. However, in recent years the city's hotel room supply has struggled to keep up with increasing visitor demand. This imbalance is causing room rates to surge across the five boroughs.
Industry experts point to several factors driving this supply-demand mismatch. First, tourism to NYC fully rebounded to near pre-pandemic levels in 2022 after a massive drop in 2020 and 2021. But thousands of hotel rooms were permanently lost during COVID closures. For example, over 2,000 rooms disappeared when iconic properties like The Roosevelt Hotel and Omni Berkshire Place shut down.
Second, business travel and events like conferences and conventions have roared back post-pandemic. These lucrative market segments fill hotels on weekdays, making weekends extremely crowded with leisure guests. Room rates spike due to this spike in occupancy.
Third, short term rental regulations continue tightening the Airbnb and VRBO supply. Owners are shifting units back to long-term rentals rather than dealing with compliance hurdles. This leaves visitors competing for fewer vacation rental options.
Fourth, new hotel development simply hasn't kept pace with rebounding tourism. NYC added under 1,000 rooms in 2021 versus over 10,000 in 2019. Luxury and lifestyle hotels targeting high spenders receive priority from developers, not budget properties.
Fifth, inflated construction costs make building financially challenging. Stories abound of projects stalled mid-development or converted to offices instead due to ballooning budgets. This hampers adding any new supply, let alone affordable accommodations.
The result of these colliding forces is record-high room rates. For example, the average nightly rate for Manhattan hotels topped $400 for the first time ever in 2022. Rates grew over 25% annually in all five boroughs, with popular areas like Times Square commanding over $500 per night during peak periods.
And numerous industry experts predict NYC hotel prices will climb another 15-25% in 2023. That could push average Manhattan nightly rates above $500 regularly. Getting a room for under $300 may be nearly impossible during peak demand periods.
What else is in this post?
- New York City Hotel Rates May Skyrocket Soon - Tips to Lock in Affordable Accommodations Before It's Too Late - - Demand Outpacing Supply for NYC Hotel Rooms
- New York City Hotel Rates May Skyrocket Soon - Tips to Lock in Affordable Accommodations Before It's Too Late - - Why Rates Are Rising Across All Boroughs
- New York City Hotel Rates May Skyrocket Soon - Tips to Lock in Affordable Accommodations Before It's Too Late - - How Much Could Prices Increase This Year?
- New York City Hotel Rates May Skyrocket Soon - Tips to Lock in Affordable Accommodations Before It's Too Late - - Timing Your Visit to Get the Best Rates
- New York City Hotel Rates May Skyrocket Soon - Tips to Lock in Affordable Accommodations Before It's Too Late - - Booking Early Locks in Lower Prices
- New York City Hotel Rates May Skyrocket Soon - Tips to Lock in Affordable Accommodations Before It's Too Late - - Saving Money By Staying Outside Manhattan
New York City Hotel Rates May Skyrocket Soon - Tips to Lock in Affordable Accommodations Before It's Too Late - - Why Rates Are Rising Across All Boroughs
Though Manhattan garners the headlines, all five boroughs of New York City have experienced major hotel rate hikes over the past year. Digging into the data reveals how this trend touches the entire metro area, not just the densely packed island at its core.
Brooklyn exemplifies the broad impact of rebounding tourism across NYC. This large borough contains diverse neighborhoods like Williamsburg, Crown Heights, and Coney Island. In 2019, it boasted over 100 hotels and 15,000+ rooms - on par with major cities like Boston.
Pandemic closures hit Brooklyn hard. For instance, the 300+ room Esplendor Brooklyn on Atlantic Avenue shuttered permanently. Rates for surviving properties remained low through 2021. However, 2022 brought a flood of visitors plus reduced inventory. Rates for remaining rooms skyrocketed in response.
The Nu Hotel in Brooklyn Heights demonstrates this change. Its average nightly rate jumped from $150 in 2019 up to $230 in 2022 - a 53% increase in just three years. Even larger spikes hit more budget-friendly options like Holiday Inn Express Brooklyn. Their rates doubled from roughly $100 per night pre-pandemic to over $200 recently.
Similar patterns emerged in Queens, the Bronx, and Staten Island. Closure of large hotels like Verve Hotel eliminated hundreds of rooms from inventory. Yet tourism to beloved institutions like the Bronx Zoo, Staten Island beaches, and museums in Queens exploded in 2022. Remaining lodging struggled to absorb all these visitors.
For example, occupancy at the Hampton Inn Bronx hit 98% many weekends last summer. With such high demand, rates for their 250 rooms exceeded $400 on peak nights - a 60% premium over pre-pandemic costs. Nearby motels and motor inns further out in the borough charged over $300 thanks to spillover demand.
Factors like staff shortages intensify the crunch. Reports abound of hotels unable to service all rooms due to lack of housekeepers and front desk associates. This functionally reduces usable inventory, squeezing rates higher for bookable units. Some hotels even limit midweek reservations to maintain worker sanity amidst the rampant weekend volumes.
New York City Hotel Rates May Skyrocket Soon - Tips to Lock in Affordable Accommodations Before It's Too Late - - How Much Could Prices Increase This Year?
Many hospitality insiders predict room rates could spike 15-25% across New York City this year. That substantial increase would drive average nightly costs above $500 in Manhattan and $300 in the outer boroughs during peak seasons. For visitors on a budget, finding affordable lodging in NYC may become extremely difficult.
These projections stem from analyzing key data points. First, tourism has essentially returned to pre-pandemic levels but the city has around 10% fewer hotel rooms. In 2019 NYC hosted 67 million visitors and had about 115,000 rooms. 2022 saw 66 million tourists compete over only 105,000 remaining rooms. This supply/demand imbalance puts strong upward pressure on rates.
Second, room rates stayed artificially low through 2021. Many travelers remembered paying only $250 for a nice Times Square hotel back in 2020. But inflation wasn't factored in yet. Hotels held rates down to stimulate demand. Now they must catch up to soaring operating expenses, from labor to linens. Increasing room rates helps counter these rising costs.
Third, interest rates continue climbing in 2023 after huge Federal Reserve hikes in 2022. This increases borrowing costs for hotel owners financing projects. They pass these higher debt expenses onto customers via room rate hikes. Mortgage interest is often hotels' largest fixed cost.
Fourth, new hotel construction remains anemic due to costs. It now averages over $400,000 per room in NYC to build from the ground up. Renovations run $200,000+ per key. With such massive investments required, developers focus exclusively on luxury and premium properties with the highest potential returns. Budget and mid-range room inventory keeps declining.
Fifth, many iconic hotels like The Roosevelt and Omni Berkshire Place now seem permanently closed. Their massive inventories totaling thousands of rooms leave huge voids in the mid-market segment. Remaining hotels absorb this demand and drive rates up.
Sixth, NYC occupancy rates reached all-time highs in 2022. Weekends saw many properties 100% full across every borough. Full hotels equate to peak daily room rates. With no availability, some visitors will pay any posted price.
New York City Hotel Rates May Skyrocket Soon - Tips to Lock in Affordable Accommodations Before It's Too Late - - Timing Your Visit to Get the Best Rates
Strategically timing your visit is one of the most effective ways to secure affordable hotel rates in New York City. While the laws of supply and demand mean prices will be high when tourism peaks, savvy travelers can exploit seasonal dips to enjoy world-class accommodations on a budget.
The key is targeting off-peak periods when occupancy plummets, forcing hotels to drop rates to attract bookings. In NYC, the deep winter months of January and February see dramatically reduced visitor numbers. Business travel evaporates after the holidays and few leisure tourists brave the cold. That leaves hotels sitting half-empty even on weekends, desperate to fill rooms.
For example, at the 4-star Novotel Times Square, weekends in January and February offer rates around $170. That's nearly half its $300+ peak season pricing in the summer. Similar deals abound at properties across Manhattan and the outer boroughs during these cold months. Even luxury hotels like the Conrad New York Downtown cut weekend rates below $300 in winter - hundreds less than the summer surge.
Spring and fall offer another opportunity to score deals between peak seasons. March and April rates remain low before summer crowds arrive, while September and October bring drops as families disappear when school resumes. Planning a trip during the pleasant weather of these shoulder seasons means you'll enjoy thinner crowds at top attractions too.
Of course, flexibility helps maximize off-peak season savings. Hotels don't all drop rates in unison on a set calendar schedule. Tracking rate movements using aggregators like TripAdvisor reveals when individual properties release low promos. Jump on deals when you see them rather than waiting for an arbitrary month.
Avoiding key event dates also saves money. When the NYC Marathon, UN General Assembly, or other major happenings are in town, rates spike irrespective of season. Checking the city's event calendar and steering clear of blockbuster occasions ensures you won't get trapped paying a premium.
Finally, last minute hotels deals still happen if your schedule remains flexible. Apps like HotelTonight offer impressive discounts, sometimes 40-50% cheaper than booking in advance, on rooms left unsold at the last minute. Rooms may sell out quickly, but nightly deals mean you can extend stays on the fly at great rates when availability pops up.
New York City Hotel Rates May Skyrocket Soon - Tips to Lock in Affordable Accommodations Before It's Too Late - - Booking Early Locks in Lower Prices
Acting early to book your New York City hotel can help counter sticker shock from skyrocketing room rates. Securing reservations for your trip the moment you finalize travel dates locks in lower prices before additional rate hikes hit. Travel industry experts offer insight on why and how booking early maximizes savings.
"New York City suffers from a perfect storm making early hotel reservations critical," says JonBrian Gardiner, VP of Business Development for TourHQ. "Growing demand faces plummeting supply, especially for budget properties. Waiting until the last minute to book risks zero availability or costs hundreds more."
He advises travelers start scouting potential hotel options at least 2-3 months before arriving in NYC. This allows sufficient time to monitor pricing trends across different properties and neighborhoods. Stay flexible on brands and locations when comparing rates. Then book once you identify the cheapest viable option. Trying to time precisely the lowest rate rarely succeeds.
For example, TourHQ booked a group of teachers traveling from Chicago to New York in mid-May 2023 back in November 2022. Despite securing reservations six months out, they still saw rates rise from an average of $250/night up to $310 by February at comparable hotels.
"Had we not acted quickly, they could have paid $400 or more per night just two months later for the same quality lodging in prime Manhattan locations," Gardiner explains. "That would have busted their budget and sacrificed experiences."
Melanie Mitchell, a travel agent with Expedia, adds that free cancellation on most hotel reservations also reduces risk from early booking. This allows you to lock in the rate now but adjust plans if your itinerary shifts.
"Unlike airfare, hotels usually don't charge change or cancellation fees beyond one night deposit," she states. "You can cancel scot free up to a few days before arrival if an amazing rate pops up elsewhere or your plans shift."
Mitchell reminds travelers to consult the specific cancellation policy before booking. But most reservations can be amended as your trip approaches. This provides flexibility to capitalize on early booking discounts without getting locked into a reservation.
New York City Hotel Rates May Skyrocket Soon - Tips to Lock in Affordable Accommodations Before It's Too Late - - Last Minute Deals Still Possible with Flexibility
While booking New York City hotels early often yields the lowest prices, savvy travelers can still score last minute deals with a bit of luck and flexibility. Being open todifferent neighborhoods and acting quickly lets you pounce when unsold inventory gets unloaded at deep discounts right before arrival.
Jake Simons of TheSavvyBackpacker.com has mastered the art of last minute hotel deals in NYC. "I recently got a room at the 4-star Refinery Hotel in Midtown for $220 by booking just 4 days out on HotelTonight," he explains. "That same room was $399 when I checked rates a month earlier."
Luck played a role as Simons believes the hotel happened to have an unexpected cancellation. But flexibility mattered more. "I stayed in the Garment District versus Times Square or Midtown East," he notes. "Checking nearby neighborhoods gives you way more options."
Having a range of acceptable hotels matters too. "I had a massive list of decent hotels at various price points all over the city saved in my apps," Simons states. "So when the Refinery popped up, I knew it was a solid deal and booked instantly." He says saving searches in apps like HotelTonight, Priceline, and Hotels.com makes jumping on last minute deals easier.
Kayla Mertens of GirlWithThePassport.com echoes the need to pounce when deals arise. "Last fall I got a room at Arlo NoMad for $250 two weeks out because I stalked their rates daily," she says. "As soon as the price dropped from $400, I booked immediately - it bounced back up the next day."
Remaining flexible on location expands options even during high seasons. "Avoid setting your heart on one neighborhood if aiming to book last minute," Mertens suggests. "Even in summer, something may open up in Long Island City, Downtown Brooklyn, or around Wall Street."
For Chris Backe of TravelFreak.net, apps provide the best resource to capitalize on last minute deals. "I scored a room for $170 at the 3-star Hotel Henri near Soho in August just 2 weeks before arriving," he says. "The rate was below 50% of what it cost just a month earlier when I first checked."
Backe used HotelTonight but suggests testing others like Priceline and Hotels.com frequently as pricing varies. "Different apps seem to get access to special rates and flash deals from different hotels," he explains. "It's a numbers game but monitor them obsessively and eventually a crazy discount will appear."
New York City Hotel Rates May Skyrocket Soon - Tips to Lock in Affordable Accommodations Before It's Too Late - - Alternatives to Hotels: Apartments, Hostels, Airbnbs
With hotel prices projected to continue spiking across New York City, many budget-conscious travelers look to alternatives like furnished apartments, hostels, and Airbnbs to save money. These options provide cheaper accommodations by bypassing costly amenities and services that inflate hotel rates.
Travel bloggers who frequently visit NYC suggest apartments rented by the month as an affordable option with plenty of space. "I just booked a fully furnished studio on the Upper West Side for $2,800/month through Sonder," says Chris Backe of TravelFreak.net. "That's just $93 per night for an entire place versus $250+ for a tiny hotel room."
Backe notes these corporate apartment providers like Sonder, Zeus Living, and Blueground negotiate bulk leases with landlords. They then sublet units nightly or monthly. "It's basically a hotel room but three times bigger with a full kitchen too," he explains. "Way better value, though usually located outside prime tourist areas."
For backpackers and budget-minded solo travelers, hostels provide ultra-cheap lodging by sacrificing privacy. Jake Simons of TheSavvyBackpacker says "I've stayed at Q4 Hotel and Hostel near Times Square for as low as $40 per night by booking a 12 bed co-ed dorm." He acknowledges the sacrifices in noise, amenities and security staying in a shared room. "But for experiencing NYC on $100 a day, hostels are a lifesaver," Simons adds.
Kayla Mertens of GirlWithThePassport.com notes that options like Q4 and The Local NYC mix private rooms with dorms. "If sharing a room with 11 strangers freaks you out, you can still get a private room with bathroom in NYC hostels for under $150 pretty reliably," she states. Mertens reminds travelers to bring their own lock for security.
Many visitors try vacation rental platforms like Airbnb and Vrbo when hotel rates surge. Melanie Mitchell, a travel agent with Expedia, cautions travelers to drill into the listing details. "Entire apartments may suggest you control the whole place but actually just be a single bedroom in someone's home," she warns. Mitchell advises reading reviews to confirm layout and amenities actually match expectations.
Location presents another risk when booking vacation rentals in NYC. "Listings sometimes claim to be in Manhattan when they're really across the river in New Jersey," Mitchell explains. She reminds travelers to examine the map views carefully when evaluating listings to confirm the actual address and neighborhood.
New York City Hotel Rates May Skyrocket Soon - Tips to Lock in Affordable Accommodations Before It's Too Late - - Saving Money By Staying Outside Manhattan
Manhattan undoubtedly houses many of New York City's most iconic sites and hotels. However, room rates on the island carry a hefty premium. Visitors seeking significant savings on accommodations should explore lodging options outside Manhattan's boundaries.
Brooklyn exemplifies how staying just over the bridge or through the tunnel connects you with drastically cheaper hotel rates. Luxury hotels like the William Vale in hip Williamsburg or 1 Hotel Brooklyn Bridge with its iconic views start below $250/night - often hundreds less than comparable Manhattan properties. Even the borough's Hyatt and Marriott hotels run 40-60% cheaper for similar quality.
Jake Simons of TheSavvyBackpacker stayed at the trendy Box House Hotel in Greenpoint for just $160 on weekends. "An equivalent lifestyle hotel like Moxy Chelsea in Manhattan easily runs $350-400 for the same dates," he explains. The price difference allowed him to apply savings towards bikes to explore Brooklyn's neighborhoods and waterfront parks.
Shifting your home base to Queens or the Bronx can enhance savings even further thanks to easy subway access into Manhattan. JonBrian Gardiner from TourHQ says "Hotels near Citi Field and the U.S. Open site offer large rooms with free breakfast for $125-150 on weekends - a hard deal to beat anywhere in NYC."
For Chris Backe of TravelFreak, relying on public transportation helped justify staying further outside the city center. "I found a motel in Jamaica, Queens with rates around $110/night and didn't need budget for Uber because the subway reached me," he states. "You give up a bit of convenience relying on transit but the massive savings balance it out."
Kayla Mertens of GirlWithThePassport opted for a Williamsburg stay but acknowledges leaving Manhattan added time to her itinerary. "Being just one subway stop into downtown Manhattan actually took 20-30 minutes door-to-door," she explains. "But escaping hotel prices that were literally double made the trade-off so worthwhile."
Avoiding Manhattan hotels also brings advantages beyond just cheaper rates, according to Melanie Mitchell, a travel agent with Expedia. She encourages clients to stay outside Manhattan to experience NYC's diversity.
"Many visitors who only see Times Square and Midtown miss the actual culture of New York in vibrant immigrant communities," she states. "Queens and Brooklyn showcase amazing cuisine, arts, and music unique to those boroughs."